Workshop explores ways to maximize savings under ESPC

By William S. Farrow Huntsville Center Public Affairs

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More than 50 government and industry representatives converged at the Bevill Center at the University of Alabama Huntsville Aug. 29 for the first Energy Savings Performance Contracting Measurement and Verification Workshop.

The workshop allowed attendees to share information, experiences, and lessons learned on past and on-going ESPC projects.

An ESPC is an acquisition vehicle an installation can use to meet energy and water reduction goals without upfront capital costs.  In close coordination with the garrison and U.S. Army Engineering and Support Center, Huntsville, the energy service contractor (ESCO) provides capital and expertise to make comprehensive energy and water efficiency improvements on facilities or implement new renewable energy capabilities and maintains them in exchange for a portion of the generated savings.

These third party financed agreements allow the garrison to focus appropriated funds on mission critical requirements.

Measurement and Verification is the term given to the process to ensure savings delivered by an ESPC project meets or exceeds the guaranteed savings goal established under the contract.

Shah Alam, Huntsville Center ESPC post-award team lead and the workshop organizer, emphasized two key areas of improvement: annual reporting of government impacts on energy savings, and government witnessing of annual M&V data collection efforts.

“The total cost saved can be affected by many factors, such as energy prices,” Alam said. “The M&V process allows the energy savings delivered by the ESPC to be isolated and evaluated objectively.”

During the day-long workshop, ESPC experts shared information with attendees through briefs and feedback sessions.

Bruce Forsberg, the Center’s engineering team lead for ESPC, explained that a key part of the M&V process is the development of an ‘M&V Plan’, which defines how the savings analysis will be conducted before the energy conservation measure (ECM) is implemented.

“This provides a degree of objectivity that is absent if the savings are simply evaluated after implementation,” Alam said.

Huntsville Center energy engineers Bryant Marshburn and Carl James, provided guidance on simplifying annual M&V reporting and emphasized consideration of uncertainties in developing realistic estimates for guaranteed savings amounts for each ESPC project.

William Eggleston, Huntsville Center safety engineer, spoke to the group about the safety requirements while collecting M&V data and Matt Urbanic, ESPC Contracting, clarified reporting requirements for ESPC projects.

Jason Bray, ESPC program manager, said in 2010, there were no more than 15 ESPC projects on Defense Department installations. He said today there are more than 60 and in the next three-to-four years, he estimated there will be more than 100 ESPC projects.

Bray said that growth shows why partnerships are so important to the ESPC program.

“Bringing together the government and the ESPC community into a central location not only strengthens those partnerships but also builds upon the business model of M&V,” Bray said.

“By coming together on an annual basis we can continue to share ideas and lessons learned that will help further the success of the ESPC's now and in the future,” Bray said. 

“As the Department of Defense portfolio continues to grow in Third Party Financing, it is imperative through our partnership with the private sector, that together we ensure the customer is both educated on what M&V requires and the roles and responsibilities for government and ESCOs therein.”

Speaking to the attendees, Navy Cmdr. Walter Ludwig, representing the Office of the Assistant Secretary of Defense for Energy, Installations and Environment, said saving energy is obviously the right thing to do for the environment; it’s also vital to national defense as energy cost savings  helps transform the U.S. military into a more lethal and capable force.

“Measuring and evaluating (our projects) enables us to get more money to the warfighter. For every dollar saved in an ESPC, a portion of that dollar may go to the warfighter,” Ludwig said.


Editor's note: The original story can be viewed on the U.S. Army Corps of Engineers website.