Energy Service Companies

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Energy service companies (ESCOs) develop, design, build, and fund projects that save energy, reduce energy costs, and decrease operations and maintenance costs at their customers' facilities. In general, ESCOs act as project developers for a comprehensive range of energy conservation measures and assume the technical and performance risks associated with a project.

ESCOs are distinguished from other firms that offer energy-efficiency improvements in that they use the performance-based contracting methodology. When an ESCO implements a project, the company's compensation is directly linked to the actual energy cost savings.

The substantial energy-efficiency retrofits and renewable energy technologies inherent in energy savings performance contract (ESPC) projects typically require a large initial capital investment and may have a relatively long payback period. Debt payments are tied to the energy cost savings guaranteed for the project, so the agency pays for the capital improvements of the ESPC project with the money saved by the project (i.e., the difference between pre-installation and post-installation energy use and other related costs).

The U.S. Department of Energy (DOE) manages two categories of ESCOs that perform federal government ESPC projects: DOE IDIQ ESPC ESCOs and DOE Qualified ESCOs.

DOE IDIQ ESPC ESCOS

The U.S. Department of Energy (DOE) has two current generations of DOE indefinite-delivery, indefinite-quantity (IDIQ) ESPC ESCOs. The most current list is associated with the ESCOs that were awarded on April 27, 2017, for the next generation DOE IDIQ. These ESCOs will provide energy saving performance contracts starting in 2017 and going through 2022, with a potential option for an 18-month extension.

The current DOE IDIQ ESPC is still viable and can be taken advantage of to award ESPCs until December 2019. FEMP recommends federal agencies that have already started working on an ESPC project continue to award using the ESCOs that that have already spent time and effort developing energy-saving performance.

DOE Qualified ESCOs

The Federal Energy Management Program (FEMP) established the DOE Qualified List of Energy Service Companies (ESCOs) in accordance with the Energy Policy Act of 1992 and 10 C.F.R. 436. The DOE Qualified List of ESCOs is composed of nearly 100 firms that have submitted applications and have been approved by the DOE qualification review board.

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Kurmit Rockwell | U.S. Department of Energy | 202-586-2078

Douglas Eisemann | SRA International | 571-446-5637