Going Above and Beyond with the General Services Administration
New windows? Check. New furnace? Check. Leaky cracks sealed? Check. Fancy new thermostat that learns your occupancy patterns? Also check. Imagine implementing measures like these and cutting your home’s energy bill in half without paying a dime for the upfront energy upgrades. These upgrades will save energy, reduce maintenance, and provide a much healthier, happier space to occupy. Sounds appealing, doesn’t it?
Now imagine you are the owner of not one home, but rather 85,000 homes. Any decision maker worth his or her salt will recognize an opportunity as significant as this, and take steps to make it happen. That decision maker is the United States General Services Administration (GSA). With nearly 10,000 federally owned and leased buildings and half a trillion dollars of federal assets under its management, the GSA is the largest building owner in the country.
The magic mechanism for the GSA’s impressive energy efficiency potential is energy savings performance contracts (ESPCs). They have been around for many decades and are regaining traction as a key mechanism for improving facilities and energy savings. They are a great fit for federally owned buildings since those buildings have a long-term holding period (at least 25 years) and the federal government has essentially no upfront capital available for improvements.
The 2014 NDER Workshop
This past April, RMI convened the GSA, 16 federally pre-qualified energy service companies (ESCOs), and other stakeholders to collaboratively improve the GSA’s National Deep Energy Retrofit program (NDER). RMI has hosted similar workshops for the GSA each year since the initiation of the program in 2011. The full report from the 2014 NDER workshop was released last week, along with previous workshop reports.
The average GSA ESPC project will save 38 percent of building energy consumption, while the Federal Government’s average savings from ESPC projects is only 18 percent. The GSA’s projects have achieved substantial energy and cost savings in its buildings without upfront capital costs and congressional appropriations. Rather, the GSA partners with an ESCO that designs, arranges financing for, and installs energy improvement measures that are paid back from a portion of the energy cost savings each year. Federal mandates require the contract not exceed 25 years, but there is a lot of savings that can be achieved in a 25-year period. Ten ESPC projects that have been implemented in the past year will save the GSA $10.6 million in energy costs annually. Now is the time for the GSA step up and apply ESPCs more broadly across its portfolio.
To enable more ESPCs and encourage deeper savings, the GSA is centralizing and streamlining the contracting and internal project management associated with ESPCs, which often kills these types of projects. Making ESPCs more accessible for projects will open up tremendous opportunities for substantial building efficiency improvements. You don’t need high energy prices, high energy consumption, advanced energy conservation measures, or long payback periods in order to achieve deep energy retrofits. It takes finding the right projects (e.g., buildings that haven’t undergone recent retrofits), an emphasis from the GSA, a thorough audit process, and above all, an integrative design approach. This is where RMI comes in.
If we consider the GSA’s entire portfolio—a group of buildings that add up to the equivalent of a small city—the potential impact is huge. GSA spends roughly $400 million each year on energy expenditures, so scaling deep energy retrofits to reach more of the portfolio could save the taxpayer hundreds of millions of dollars each year.
Millions more in energy savings could be available if we work together to increase that to over 50 percent, which we think is very achievable if both the GSA and ESCOs step up just a little bit more. Savings at that scale would provide a significant return on taxpayer dollars while reducing greenhouse gas emissions, improving the quality of the federal building stock, and meeting federal mandates.
This call for deeper energy retrofits has been the focus of the GSA’s National Deep Energy Retrofit (NDER) program.
The NDER Program—Billions of Dollars to Save Billions of BTUs
The GSA’s NDER program is an initiative to deliver ESPCs in GSA buildings with deeper energy savings than typical projects. This highly innovative and commendable program has seven key goals:
- Move federal facilities towards net-zero energy consumption
- Use comprehensive and integrated whole-building approaches to determine energy conservation measures (ECMs)
- Use innovative technologies
- Use renewable-energy technologies
- Reduce water consumption
- Implement cost-effective retrofits with payback periods of 25 years or less
- Complete associated construction work without major tenant disruption
I wish more government agencies thought like this, and more importantly, acted on it.
This program was partially inspired by the Presidential Performance Contracting Challenge, a presidential memorandum released in December 2011 that calls for federal agencies to enter into $2 billion worth of ESPCs within 24 months. This policy was subsequently extended in 2013, with an additional goal of $2 billion more in ESPCs (totaling $4 billion by the end of fiscal year 2016).
Generating Excitement in the Industry
After the 2014 workshop, RMI caught up with several meeting attendees. Several of the ESCOs in attendance highlighted the data analysis, NDER case studies, and the GSA’s lessons learned as highlights of the workshop. They say that the NDER program has been a major point of excitement and continual improvement in the ESCO industry.
“The NDER program has helped ESCOs focus on more effective energy conservation measures that drive deeper savings than those included in typical ESPC projects,” reports John Saams, business development director at Siemens Government Technologies. “Siemens has been able to carry some of the strategies used during the first round of NDER projects into some of its other ESPC projects.” Bigger savings with a much a broader reach? Check.
Derek Supple, federal business development manager at Johnson Controls, Inc. echoed similar sentiments. “The ESCO industry has been around for decades, and has exhausted some of the ‘low-hanging fruit’ opportunities,” he says. “The NDER program demonstrates that combining these ‘low-hanging fruits’ with new processes and strategies can help customers achieve deeper energy savings.”
Kinga Porst, sustainability and green buildings program advisor at the GSA and a key leader in developing the NDER program, is enthusiastic about the continual improvement that the workshops have brought to the NDER program. “The workshops played a key role by creating a venue for open communication and sharing of experiences, creative ideas, and excitement,” she explains. “That, coupled with the constant reinforcement and communication from GSA, has helped push ESCOs to dig deeper and achieve the wonderful successes we have had.”
In May 2014, GSA released another round of projects under the NDER program. This included 49 buildings spanning 5 different regions with a total of over 19.6 million square feet. Preliminary assessments are currently under way and contracts are expected in the next year. I challenge both the GSA and ESCOs to think big and execute even bigger … for the sake of our economy, the health of our buildings, the environment, and, in particular, our highly-climate-change-susceptible friends on the coasts.
Image courtesy of Shutterstock.