There is growing interest in energy efficiency (EE) among state policymakers as a result of increasing environmental concerns, rising electricity and natural gas prices, and lean economic times that motivate states to look more aggressively for cost-saving opportunities in public sector buildings. One logical place for state policymakers to demonstrate their commitment to energy efficiency is to 'lead by example' by developing and implementing strategies to reduce the energy consumption of state government facilities through investments in energy efficient technologies. Traditionally, energy efficiency improvements at state government facilities are viewed as a subset in the general category of building maintenance and construction. These projects are typically funded through direct appropriations. However, energy efficiency projects are often delayed or reduced in scope whereby not all cost-effective measures are implemented because many states have tight capital budgets. Energy Savings Performance Contracting (ESPC) offers a potentially useful strategy for state program and facility managers to proactively finance and develop energy efficiency projects. In an ESPC project, Energy Service Companies (ESCOs) typically guarantee that the energy and cost savings produced by the project will equal or exceed all costs associated with implementing the project over the term of the contract. ESCOs typically provide turnkey design, installation, and maintenance services and also help arrange project financing. Between 1990 and 2006, U.S. ESCOs reported market activity of (almost equal to)$28 Billion, with about (almost equal to)75-80% of that activity concentrated in the institutional markets (K-12 schools, colleges/universities, state/local/federal government and hospitals). In this study, we review the magnitude of energy efficiency investment in state facilities and identify 'best practices' while employing performance contracting in the state government sector. The state government market is defined to include state offices, state universities, correctional facilities, and other state facilities. This study is part of a series of reports prepared by Lawrence Berkeley National Laboratory (LBNL) and the National Association of Energy Services Companies (NAESCO) on the ESCO market and industry trends. The scope of previous reports was much broader: Goldman et al. (2002) analyzed ESCO project costs and savings in public and private sector facilities, Hopper et al. (2005) focused on ESCO project activity in all public and institutional sectors, while Hopper et al (2007) provided aggregate results of a comprehensive survey of ESCOs on current industry activity and future prospects. We decided to focus the current study on ESCO and energy efficiency activity and potential market barriers in the state government market because previous studies suggested that this institutional sector has significant remaining energy efficiency opportunities. Moreover, ESCO activity in the state government market has lagged behind other institutional markets (e.g., K-12 schools, local governments, and the federal market). Our primary objectives were as follows: (1) Assess existing state agency energy information and data sources that could be utilized to develop performance metrics to assess progress among ESPC programs in states; (2) Conduct a comparative review of the performance of selected state ESPC programs in reducing energy usage and costs in state government buildings; and (3) Delineate the extent to which state government sector facilities are implementing energy efficiency projects apart from ESPC programs using other strategies (e.g. utility ratepayer-funded energy efficiency programs, loan funds).

Performance Contracting is a must-read for those concerned about energy and the environment. It examines state-of-the-art facts and pragmatic realities from financing to measurement and verification, and includes up-to-date how-to's for both end users and energy service companies. Readers will find expert advice on RFPs and RFQs, tips on making an energy project investment worthy, and guidelines for effectively negotiating and developing energy services agreements. They will also learn the key strategies for managing risks, both from a user's and a service provider's point of view, as well as ways to expand business and serve customers more effectively.

The current universal concerns about global energy security, competitiveness, and environmental protection make energy efficiency more important than ever. However, realizing large-scale savings has proven a significant challenge due to many barriers. 'Public Procurement of Energy Efficiency Services' looks at a largely untapped energy efficiency market the public sector. While the efficiency potential in this sector is substantial, the implementation of energy savings programs has been complicated by a number of factors, such as insufficient incentives to lower energy costs, rigid budgeting and procurement procedures, and limited access to financing. The book looks at energy savings performance contracts (ESPCs) as a means of overcoming some of these barriers. Because public facilities can outsource the full project cycle to a commercial service provider, ESPCs can enable public agencies to solicit technical solutions, mobilize commercial financing, and assign performance risk to third parties, allowing the agency to pay from a project s actual energy savings. The recommendations in this book stem from case studies that identified approaches, models, and specific solutions to ESPC procurement, including budgeting, energy audits, and bid evaluation. Such an approach also offers enormous potential to bundle, finance, and implement energy efficiency projects on a larger scale in the public sector, which can yield further economies of scale. ESPCs can also serve as an attractive element for fiscal stimulus packages and efforts by governments to 'green' their infrastructure, which can create local jobs, reduce future operating costs, and mitigate their carbon footprint. Lower energy bills, in turn, help to create fiscal space in future years to meet other critical investment priorities. Bundled public sector energy efficiency projects can help stimulate local markets for energy efficiency goods and services and 'lead by example', demonstrating good practices and providing models to the private sector.

Constrained budgets and increasing energy efficiency goals have led federal agencies to explore innovative ways to fund energy improvements, including ESPCs. An expected increase in the use of ESPCs has raised questions about agencies' ability to ensure that the government's interests are protected. ESPCs can span up to 25 years and be valued at millions of dollars each. GAO was asked to review federal use of ESPCs since 2005. This report examines the extent to which (1) agencies have used ESPCs and plan to use them; (2) projects have achieved their expected cost and energy savings; and (3) agencies have overseen and evaluated such projects. GAO compiled data on awarded ESPCs; reviewed agency guidance and files for a nongeneralizable sample of 20 ESPC projects that reflected a range of contract award dates, contract values, and other characteristics; and interviewed officials from the seven agencies with the highest energy usage and greatest facility square footage-the Air Force, Army, and Navy within the Department of Defense; the Departments of Energy, Justice, and Veterans Affairs; and the General Services Administration.

Constrained budgets and increasing energy efficiency goals have led federal agencies to explore innovative ways to fund energy improvements, including ESPCs. An expected increase in the use of ESPCs has raised questions about agencies' ability to ensure that the government's interests are protected. ESPCs can span up to 25 years and be valued at millions of dollars each. GAO was asked to review federal use of ESPCs since 2005. This report examines the extent to which (1) agencies have used ESPCs and plan to use them; (2) projects have achieved their expected cost and energy savings; and (3) agencies have overseen and evaluated such projects. GAO compiled data on awarded ESPCs; reviewed agency guidance and files for a nongeneralizable sample of 20 ESPC projects that reflected a range of contract award dates, contract values, and other characteristics; and interviewed officials from the seven agencies with the highest energy usage and greatest facility square footage -- the Air Force, Army, and Navy within the Department of Defense; the Departments of Energy, Justice, and Veterans Affairs; and the General Services Administration. GAO is making recommendations to improve oversight of ESPC projects through clearer reporting of savings, improved training, and systematic evaluations of portfolios, among other things.

While energy efficiency projects could partly meet new energy demand more cheaply than new supplies, weak economic institutions in developing and transitional economies impede developing and financing energy efficiency retrofits. This book analyzes these difficulties, suggests a 3-part model for projectizing and financing energy efficiency retrofits, and presents thirteen case studies to illustrate the issues and principles involved.