Better bang for your buck? Comparing savings realization from ESPCs and direct-funded projects
Energy savings performance contracts (ESPCs) offer an opportunity to tremendously scale decarbonization projects, given their paid-from-savings premise. However, prospective customers still question whether ESPC is worth the effort and expense. This study evaluates the savings realization rates of ESPCs compared to direct-funded projects using ENERGY STAR Portfolio Manager (ESPM) benchmarking data. It compares normalized EUIs from ESPM before and after energy conservation projects implemented via ESPC or direct funding in roughly 450 federal buildings. This documented change, ideally a savings, can then be compared to the estimated savings from the energy conservation initiative in order to generate a rough realization rate. Preliminary results indicate a notably greater savings realization rate for the ESPC buildings
(median = 105% of estimated savings) than those that underwent direct-funded projects (median = 46%). Because of a shortage of good quality data and the wide range in results, the difference is only significant at the p < 0.20 level. However, the higher savings realization of ESPCs corroborates the authors’ 2014 findings using a different comparison method. With continued soft government funding and regulatory impediments for climate change mitigation in the U.S., financed, paid-from-savings project models (e.g., ESPC, PACE, EaaS and others) certainly merit more attention. This study’s results are particularly compelling (and encouraging) given the country’s likely reliance on these vehicles to address existing building retrofits.