By leveraging the Investor Confidence Project’s Energy Performance Protocols, the Federal Energy Management Program (FEMP) can streamline federal contracting, by standardizing engineering requirements and documentation, resulting in reduced administrative burden when developing opportunities and evaluating proposals, as well as allowing for better benchmarking and transparency. Standardization will create a more competitive and innovative market and ensure that the federal government is receiving the greatest return on its energy efficiency investments.
Because the Investor Confidence Project Protocols are being adopted in the private sector, FEMP’s public investment will also build a track record and actuarial data that will support the growth of a private market for energy efficiency. Larger markets will amplify federal investments and help hit broader federal objectives that include dramatic reductions in building energy use across all categories of buildings.
The ICP can help FEMP accomplish many of its stated goals:
Increase the speed at which projects can be awarded
Utilizing the Investor Confidence Project protocols will vastly simplify underwriting. Projects that are developed following standard protocols will be much easier to assess and understand, which will reduce the time and expense of often redundant re-engineering cycles. It will also reduce cost of sale as RFPs become consistent, and project developers will be able to evaluate projects and deploy consistent services.
Improve the certainty of savings persistence
By standardizing on a full lifecycle approach to the engineering and measurement process for energy efficiency retrofits, FEMP will reduce performance risk and variance by requiring best practice standards that include baseline, auditing and prediction, commissioning, operation and maintenance, ongoing commissioning and measurement and verification. By reducing variation in the engineering process, FEMP will drive more reliable results and data, which will in turn result in lower costs for performance guarantees and capital.
Encourage innovation in project finances and risk management
Currently the FEMP rules favor an integrated approach to the ESCO market where only large companies that can serve the entire project and have substantial balance sheets are able to participate. ICP will enable a more open market where a broader field of qualified providers will create more competition and innovation. The same core functions of a traditional integrated ESCO can be accomplished in a distributed model where companies team up to provide services on a single project. This environment will be conducive to teams of smaller and more specialized companies, allowing new ideas and business models to be developed, tested, and deployed to the market. Through collaboration, companies can more effectively find new solutions, create new products, and manage risk for building owners.
Enable FEMP to streamline ENABLE Program for Smaller Facilities
Standard engineering and project workflow will reduce transaction costs for both buyers and sellers. With everyone speaking the same language, more fluid teams will emerge to service this market and reduce upfront costs and risk associated with the complexity of contracting in the Federal arena. This will address current challenges that limit providers to only those large companies who provide full services and can afford the high transaction costs associated with gaining access to Federal contracts by standardizing the approach and engineering process.
Contribute to the development of private markets and commercial building retrofits
FEMP has an opportunity to align standards in the public and private markets in a way that will create synergies in both arenas and help drive a larger and more sustainable national marketplace, increase transparency, build consistent actuarial data on performance, and increase energy efficiency in all sectors.