Just before leaving office last week, President Obama sent out praise for a wide range of federal agencies that had entered into energy contracts since 2011. The contracts covered everything from more efficient HVAC equipment to renewable energy and “smart” operational systems and LED lighting retrofits. The estimated savings of these upgrades over the next 18 years add up to an astounding $8 billion in energy savings. But as will all government contracts, the real question is how much of that contract came out of the wallet of John Q. Taxpayer. Would you believe it actually cost the taxpayer – nothing? Let’s take a look.
Government Energy Upgrades Save Taxpayers Money
Without these upgrades, it’s expected that taxpayers would have paid $8 billion for energy costs. However, the cost to do the work in all 340 contracts are estimated to be $4.2 billion. But the taxpayer is paying nothing for these upgrades. How does that work? It involves a new concept called a power purchase agreement.
Credit for Solar Power
A familiar strategy in solar power, power purchase agreements allow a property owner to add solar panels to their home or business without an up-front cost or a loan. With the panels in place, the owner would usually get a credit from the power company instead of having to pay their bill. Typically, the solar panel company receives the credit without having to purchase the real estate to place the panels and the owner has a much lower electric bill every month. Beyond the home or business owner, however, the government has now begun taking advantage of this system, including the military. Tinker Air Force Base in Oklahoma is home to the largest single performance contract at $262 million over 50 buildings on the base expected to see reduced energy use by 44%, saving the military $3.5 million dollars every year.
Now other industries are beginning to get on board, using energy saving performance contracts. Energy efficient upgrades are paid for in installments based on the amount of energy that is being saved, so the increase in cost is eliminated. Once the contract ends, the full savings goes to the property owner. The Department of Energy is lauding these new financial agreements that help save energy.
Upgrades Creating New Jobs
It’s also estimated that these contracts are creating up to 30,000 new jobs over the course of the next 18 years. Though the initial round of contracts under the President’s Performance Contracting Challenge started in 2011 only focused on achieving $2 billion in performance contracts between federal agencies and private energy companies. With the success of the program, another $4 billion was added to the challenge in an attempt to take advantage of the interest in performance contracts. Once the program passed that mark in the fall of 2016, another $2 billion was added to continue the momentum. This last round, dubbed the Next Generation Performance Contracting Challenge includes an additional focus on saving two billion gallons of water at the same time.
LED Lighting Retrofits
One of the other areas where energy savings have been found, both through performance contracts and regular retrofit projects, are energy-efficient LED lighting retrofits. If you’d like to see what kind of savings your business can achieve with these lights, please feel free to contact Retro-Tech Industries today for more information.