Beyond Guaranteed Savings: Additional Cost Savings Associated With ESPC Projects
- Oak Ridge National Laboratory (ORNL), Oak Ridge, TN (United States)
Energy Savings Performance Contract (ESPC) projects are generally believed to deliver only small cost savings to the government, given that most of the guaranteed savings are paid to the Energy Service Company (ESCO). The main conclusion of this report is that significant cost savings do accrue to the government. These savings come about because (1) the ESCO does not guarantee all of the savings it estimates; (2) the useful life of the equipment extends beyond the performance period of the ESPC; (3) National Institutes for Standards and Technology (NIST)/Energy Information Administration projections for energy price escalation have been very conservative with respect to actual price increases; and (4) the baseline case that forms the basis of the guaranteed savings calculation assumes that the baseline equipment would maintain the same efficiency and require the same level of maintenance for a period of time equal to the performance period of the ESPC. More realistic assumptions indicate that for a representative project, the federal government receives nearly twice the level of cost savings guaranteed by the ESCO. Figure 1 presents a breakdown of the sources of these savings.
- Research Organization:
- Oak Ridge National Laboratory (ORNL), Oak Ridge, TN (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- DOE Contract Number:
- AC05-00OR22725
- OSTI ID:
- 1086643
- Report Number(s):
- ORNL/TM--2013/108; EL1702010; CEEL035
- Country of Publication:
- United States
- Language:
- English
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