Manufacturers Gunning for Government Energy-Saving Performance Contracts

Feb. 25, 2011
Eaton Corp.’s announcement earlier this week that it had been certified by the U.S. Department of Energy (DOE) as an energy service company (ESCO)

Eaton Corp.’s announcement earlier this week that it had been certified by the U.S. Department of Energy (DOE) as an energy service company (ESCO) offered a glimpse into the world of turn-key energy projects for federal facilities owned by the government entities such as the General Service Administration (GSA) and various branches of the military.

Competing for these contracts with Eaton are well-established ESCOs such as Ameresco, ConEd Solutions, Constellation Energy Projects & Services, FPL Energy Services, Honeywell, Johnson Controls, Noresco and Trane. Also after these contracts are electrical players such as Schneider Electric and its ESCO business unit, TAC Americas; Siemens, through its Government Services unit; Facility Solutions Group, the Austin, Texas-based electrical distributor; and EMCOR, the publicly held contracting firm.

In a press release announcing the certification, Paul Cody, vice president and general manager of Eaton’s Electrical Service & Systems division, said, “As the need for energy efficiency and sustainability increases, so does the demand for the expertise of ESCO-certified companies. Eaton is honored to be included among such a prestigious list of energy companies, utilities and other organizations that represent sustainability, energy efficiency and power management.”

The press release also said the designation acknowledges Eaton as an ESCO company able to manage turnkey total energy solutions that include all aspects of key projects, such as needs assessments, installation of systems and equipment, savings verification, financing and maintenance. According to information on the website of DOE’s Federal Energy Management Program (FEMP), federal agencies can use two different types of ESCOs — those that have competed for and been awarded a master DOE energy saving performance contract (ESPC), and “qualified” ESCOs that have been screened by a Qualifications Review Board composed of representatives of the Federal Interagency Energy Management Task Force and DOE.

The FEMP website also offered some insight into just how much the federal government is spending annually on these contracts and the different types of work done at these facilities. During 2010, the DOE awarded $1.14 billion in contracts for work at government facilities that included electrical work and a wide variety of other building systems. These contracts guarantee the federal government $1.16 billion in energy savings. The chart on this page offers additional insight into the 2010 contract awards that included electrical work. In addition to upgrades to lighting and building automation systems, these contracts often included upgrades to boilers, chillers and HVAC systems and the installation of renewable energy systems. Since the inception of the Department of Energy’s (DOE) energy savings performance contracts (ESPCs) in 1998, 262 DOE ESPCs been awarded, and more than $2.3 billion has been invested in federal energy efficiency and renewable energy improvements.

According to data on the FEMP website, Schneider Electric and its TAC subsidiary and the Siemens Government Services division have been involved with ESCO work for years. Over the past 18 years, TAC said it completed 400 energy performance contracts that guaranteed over $122 million in energy savings, with actual savings to date exceeding $147 million. In the profile on the Siemens ESCO unit available on the FEMP website, Siemens said, “Over the past 10 years, the Siemens Energy Team has delivered more than 5,000 energy projects, guaranteed over $2 billion of energy savings and achieved a performance record achieving 99.98 percent of the energy savings forecasted.”

Eaton’s ESCO unit has also won some big contracts. According to Electrical Marketing research, in 2010 Eaton’s ESPCs included a $20 million turnkey contract for the design and installation of a 3.2MW photovoltaic system for the Albuquerque Department of Veterans Affairs health care system, and an $8 million contract for electrical products and services for a new military medical center in San Antonio, Texas.

—­ Jim Lucy