Federal agencies, among the largest consumers of energy, are focused on ensuring they’re operating as efficiently as possible while making sure power is available when and where it’s needed, according to software-industrial company Honeywell.
One way to do so is through a funding vehicle called an energy savings performance contract (ESPC), which allows organizations to fund facility improvement work that can have a substantial impact on energy efficiency without an upfront capital investment. The work is paid for through energy and operational savings generated annually from the project upgrades.
To that end, Honeywell and the US Air Force recently announced a 21-year ESPC with Tinker Air Force Base in Oklahoma City, Oklahoma, that will reduce energy consumption by 23% and save the base $20.5 million in energy and operational costs each year. It is one of the largest ESPCs ever awarded by the federal government, committing $243 million to necessary infrastructure upgrades.
Honeywell Vice President Kevin Madden, a leader in Honeywell’s energy services business, talked about the significance of the project.
What is the current state of federal facilities and their energy consumption?
The US federal government is one of the largest energy consumers in the world, with thousands of facilities operating across the country. In fact, the US Department of Defense (DOD) alone was responsible for 93% of all US government fuel consumption in 2007 (Air Force, 52%; Navy, 33%; Army, 7%; other DOD, 1%). Energy resources are crucial to the operations of federal facilities, therefore the government and more specifically, the DOD, has been focused on reducing energy demand, increasing energy security, and meeting government-wide renewable energy goals across their sites.
Furthermore, it’s become vital for federal facilities to maintain infrastructure upgrades in order to ensure energy reliability and operational success. To meet these goals, there has to be collaboration between the public and private sectors. The government partners with corporations like Honeywell that have the technology and expertise to figure out how to boost energy efficiency and improve infrastructure, which is where ESPCs come in.
What exactly is an ESPC and what are some benefits they provide?
An ESPC is a partnership between a federal agency and an energy service company (ESCO) — Honeywell, for instance. The ESCO conducts a comprehensive energy audit of a facility, and identifies energy-saving improvements. The company then designs a project that meets the agency’s needs and arranges the necessary funding. All of this is done without an upfront capital investment, and under a guarantee that the upgrades will generate enough savings to pay for the project over the term of the contract, up to 25 years.
The major benefit of ESPCs is they allow for very impactful upgrades that would otherwise require a significant investment—which many of these organizations don’t have. Then, the work is paid for with guaranteed savings. Furthermore, ESPCs fuel job growth due to the necessary labor needed to complete the work. According to the National Association of Energy Services Companies, a $10 million project has the potential to create or sustain approximately 95 high-paying jobs.
What is Honeywell’s experience with ESPC project work?
Honeywell is a pioneer in the development of ESPCs and has completed approximately 6,000 guaranteed efficiency projects in facilities around the world, work that is expected to deliver more than $6 billion in energy and operational savings for customers. This includes upgrades at more than 150 government facilities.
In addition to the latest work at Tinker, Honeywell has previously conducted project work at the Tinker Air Force base including a $19.1 million facility modernization project with Oklahoma Gas & Electric in 2016, which is expected to reduce energy consumption by 44% and lower energy expenses at the base’s assembly plant. Additionally, in 2012, Honeywell and the Air Force launched an $80.6 million energy efficiency project to improve operations and cut utility costs at the base.
This article was reprinted with permission from Honeywell.