Originally published on RMI Outlet.
By Matt Jungclaus
Federal agencies are coming under increasing pressure to pursue—and seeing increasing benefit from—deep savings via energy retrofits. With the passage of Executive Order 13693 accelerating federal sustainability targets in March, the Energy Efficiency Improvement Act of 2015 in April, and the Clean Power Plan in August 2015, federal agencies are scrambling to target larger energy reductions, install more renewable energy resources, follow a number of sustainability-based principles, and even aim for net-zero energy. In September, the Department of Energy released a common definition for net-zero energy buildings that also applies to campuses, portfolios, and communities, heralding a push toward net zero.
This promises an exciting energy future but presents a challenge for the government given limited appropriated funds and personnel. The Energy Exchange, a three-day conference held in August 2015, was a true testament to this increasing priority, and an acknowledgement that public- and private-sector collaborations are the best way to get there.
Public- and private-sector collaborations allow the federal government to benefit from market advantages and allow private companies to serve a substantial and forward-thinking client. The government benefits from the expertise, agility, and market savvy of private energy services companies, technology vendors, and energy consultants. While government agencies could provide some of these services in-house, contracting these services allows them to focus on agency mission while relying on private firms to provide more cost-effective and cutting-edge services. Because winning a project with the government is competitive, public-private collaborations provide a higher return on the taxpayer dollar while supporting agency mission. In serving the federal government, these companies gain a huge and reliable customer that is able to drive more-aggressive energy goals (and more interesting energy projects) than private-sector clients due to the long-term view they take of their facilities.
Promoting the True Exchange of Ideas
The Energy Exchange is an opportunity to share best practices, learn about the cutting edge in energy performance, and discuss the benefits that contractors in this space can provide. This in-person meeting is the only event of its kind at this scale, and nothing like it has been held since 2011. It has the convening power to bring the disparate federal players together despite budget cuts and travel limitations.
While the stated purpose of the 2015 Energy Exchange was to provide training in energy practices, the true value of this event came from informal conversations, group discussions, and face-to-face engagements between federal and private players. In-person engagements can lead to new introductions, creative brainstorming, and a sense of camaraderie that can’t be achieved through digital communication. Many speakers at the Energy Exchange’s closing session recognized the important exchange of ideas that can only occur at an in-person event, including Katherine Hammack, assistant secretary of the Army for installations, energy and the environment, who said that “the informal collaboration is just as important as the formal seminars.”
Alternative Financing can Achieve Goals on a Budget
A focus of the Exchange was leveraging alternative financing and creative contracting vehicles to achieve energy goals. With limited federal budgets, loftier energy goals are difficult for the federal government to achieve using standard construction contracts and appropriated funding. The innovation of non-government players has brought about mechanisms like the energy savings performance contract (ESPC), which allows the government to finance energy savings projects with private funding that is paid back through the energy savings themselves, meaning that agencies do not need Congress to appropriate funds to meet energy goals.
Creative financing options like ESPCs are essential to ringing in the new era of efficient and renewable energy systems. Because federal budgets constrain capital improvement projects, alternative financing structures and risk sharing with the private sector are necessary. When implemented thoughtfully, projects using ESPCs can cost-effectively drive deep savings, help the government achieve energy goals like the annual energy reduction targets laid out in Executive Order 13693, and align with agency mission.
Supporting the Mission through Efficiency and Renewables
Pursuing energy efficiency and renewable energy options often supports agency mission in more ways than one would think. For example:
- Army, Navy, and Air Force: Energy efficiency and renewable energy support resilience by allowing buildings to self-sustain when grid electricity is down or buildings are not tied to the grid. Where off-grid buildings rely on diesel fuel generators for electricity, lowering electricity demand can reduce the need for frequently targeted and difficult-to-protect fuel convoys in enemy territory.
- GSA: Energy efficiency can provide more cost-effective federal workspace and deliver values beyond energy cost savings, including more-appealing and productive installations. High-performance building projects from the GSA can also bolster its position as a leader in energy efficiency for the federal government.
- Department of Agriculture: Relying less on fossil fuels allows agencies like the U.S. Forest Service and the U.S. Fish and Wildlife Service to maintain resilience and reduce transportation fuel needs for travel to remote locations. Reducing fossil fuel needs and vehicle miles traveled on protected federal lands also fosters greater environmental stewardship.
Deep Energy Retrofits in the Public Eye
Deep retrofits, or energy retrofits that employ integrative design principles to achieve significant energy savings (30 to 50 percent or more) were a key theme of the 2015 Energy Exchange. Training sessions featured “deep energy retrofits” and “deeper energy savings” prominently, or highlighted the added benefits that a project received by delivering energy savings that go beyond typical project savings. As energy-reduction goals grow more ambitious, agencies can benefit from driving deeper savings in their projects.
Increased attention to these above-average energy-retrofit projects indicates a change in tone. When the term “deep retrofit” first came into use some years ago, these forward-leaning energy projects were few and far between. As deep retrofit projects and the resulting expansion of public- and private-sector experience with them grow, the federal government is asking for them. The GSA’s National Deep Energy Retrofit program and the Army’s Net Zero program are key indicators that the government is demanding the leading edge in terms of energy (and in some cases, water and waste) efficiency. Several deep energy retrofit ESPC projects are outlined in RMI and the GSA’s recent report, Deep Savings using Energy Savings performance Contracts: Success Stories.
Leveraging the Public-Private Balance to Drive Change
The Energy Exchange shows that the government will continue to lower its energy consumption and that collaboration with the private sector is key to doing this creatively and cost-effectively. By striving for deeper energy savings on every project, the government can leverage private-sector competencies and make greater progress. Financing structures like ESPCs allow the government to do this without asking for appropriated funding from Congress. By working with the energy services companies, consultants, and vendors, the government is able to focus on its core mission while making progress toward a more energy efficient future.
During the opening session, Dr. Tim Unruh, the director of the Federal Energy Management Program (which organized the Energy Exchange), reiterated the fact that new federal energy goals make this the “most exciting time” to be working in this space, but that the federal government and private sector will need to work together to drive deeper energy savings at greater speed and scale in order to be successful. In leveraging the full competencies of the federal government and private companies, projects can be more effective and deliver a greater return on the taxpayer dollar.
Image courtesy of Shutterstock.
Reprinted with permission.