Bundling a variety of energy conservation measures (ECMs), including water efficiency and on-site generation, enhances utility energy service contracts (UESCs) and energy savings performance contracts (ESPCs), ensuring federal agencies get the best value possible. Energy efficiency measures are inherent in performance contracts. However, do not overlook the possibility to bundle novel ECMs alongside more traditional energy efficiency measures.
Bundling also provides agencies with the ability to provide comprehensive solutions, which include both short and long payback ECMs, and to incorporate resilience measures including microgrids. This bundling approach also offers additional benefits by reducing contract and administrative burdens of multiple contract actions and optimizing energy savings. Beginning with the Notice of Opportunity (NOO) for ESPCs or Letter of Interest (LOI) for UESCs, the performance contractor should be given the ability to investigate all ECM opportunities, in addition to the agency emphasizing any ECMs that are critical or highly desired.
The U.S. Department of Energy (DOE) Federal Energy Management Program (FEMP) Practical Guide to Savings and Payments document is intended to convey a practical understanding of how to interpret and apply the statutes and rules that define allowable energy and cost savings and payments under ESPCs. Unless specifically intended for guaranteed savings in ESPCs, the methods in the Practical Guide to Savings and Payments can also be used for UESCs.
Agencies should pursue bundling when practical and consider the following ECMs:
Distributed Generation
Federal agencies are encouraged to include distributed generation within performance contracts. Leveraging performance contracts to include distributed generation energy systems along with energy and water conservation measures increases project impact, and can help provide resilience and security integration.
Water Efficiency
Water efficiency technologies often have short paybacks, and agencies are discovering that incorporating water efficiency as part of an energy program helps to improve the overall cost effectiveness of the project and may reduce the contract term.
As it becomes more difficult to secure internal funding for efficiency projects, including water efficiency measures in your performance contract can be a very effective way to reduce water use and provide a short payback ECM that can help your agency to incorporate longer payback ECMs into a comprehensive performance contract.
FEMP’s Water Efficiency website details opportunities and guidance for federal water management projects.
Metering
Incorporating metering into performance contracts is a practical way to update energy measurement capabilities and to meet advanced metering legislative requirements. Advanced meters or metering devices must provide data at least daily and measure the consumption of electricity at least hourly (15 minutes is preferable). See FEMP’s Metering in Federal Buildings web page for more information.
Installing advanced meters may also aid in measurement and verification of ECMs within your performance contract, allowing agencies and performance contractors to track project results per contract agreements.
Grid Edge Measures
Grid edge measures optimize energy use and reduce costs through load shedding, shifting, modulation, and/or efficiency. Short payback and high net present value are typical for grid-edge projects, making them attractive to the performance contracting domain. These short payback ECMs can be leveraged to help longer payback ECMs get included in a comprehensive project. For grid-edge measures with highly variable savings, or savings that are difficult to determine prior to implementation, a reserve account held by the contractor to capture indeterminate savings could be considered.
Laboratories and Data Centers
Specific facility types present unique challenges and opportunities for performance contracts, offering significant potential for bundling ECMs. High-energy-demand facilities, such as laboratories and data centers, require specialized energy efficiency strategies due to their continuous operational needs and complex equipment. Implementing tailored ECMs in these facilities can drive substantial energy savings and enhance resilience.
FEMP’s Smart Labs Program enhances laboratory safety and efficiency through high-performance strategies. It integrates physical, administrative, and management approaches to optimize laboratory operations while reducing energy consumption.
Demand Response
Demand response and time-variable pricing programs, when available, are excellent elements to bundle into your performance contract. These programs provide incentives for customers to voluntarily decrease or shift loads and allow agencies to use on-site generation, load reduction, and on-site storage solutions which may be incorporated into a microgrid. Where savings are difficult to determine prior to implementation, a task order modification or reserve account approach may be considered once the amount of savings is known.