Energy service companies (ESCOs) develop, design, build, and arrange financing for 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 (ECMs) 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 three categories of ESCOs that perform federal government ESPC projects:
DOE Qualified List of ESCOs
The Federal Energy Management Program (FEMP) established the DOE Qualified List of ESCOs in accordance with the Energy Policy Act of 1992 and 10 C.F.R. 436.32. FEMP maintains a qualifications process for ESCOs that are interested in offering for ESPC services. Companies must first be approved for the DOE Qualified List of ESCOs and, subsequently, they may compete under other mechanisms to provide ESPCs with federal agencies. For example, appearing on the DOE Qualified List of ESCOs is a requirement for ESCOs to compete for DOE’s IDIQ contract, ESPC ENABLE under the General Services Administration's (GSA) Supply Schedule SIN 334512, USACE MATOC, and VA IDIQ ESPC.
The DOE Qualified List of ESCOs is composed of about 100 firms that have submitted applications and have been approved by the DOE Qualification Review Board.
DOE IDIQ ESPC ESCOs
The current DOE IDIQ ESPCs, known as GEN 3, were awarded on April 27, 2017, to 21 ESCOs. These ESCOs will provide energy savings performance contracts starting in 2017 and going through 2022, with a potential option for an 18-month extension.
The legacy DOE IDIQ ESPC, known as GEN 2, includes projects in construction and performance periods.
DOE ESPC ENABLE ESCOs
ESPC ENABLE is designed to permit a standardized and streamlined procurement process for small federal projects to install ECMs in six months or less. ESPC ENABLE projects use the GSA Federal Supply Schedule SIN 334512 to select a qualified ESCO.
NOTE: Firms that are shown on the GSA Supply Schedule SIN 334512, but are not approved and shown on the DOE Qualified List of ESCOs, are not eligible for the ESPC ENABLE program.
The ESCO is required to complete a two-step qualification process to become an eligible ESPC ENABLE or SIN 334512 service provider.