By Traci McMillan and Sophia Yan | August 23, 2011 12:06AM ET
(Bloomberg) — Federal agencies seeking to meet environmental benchmarks are increasingly relying on contracts in which companies that perform energy-saving projects on government buildings are paid back through the savings that accrue.
As the CHART OF THE DAY shows, the use of “energy savings performance contracts” has grown eight-fold since 1998. The Department of Energy awards the contracts across all agencies with a guarantee that the contractors will be responsible for financing the work. ??
Contractors identify improvements to save energy and guarantee the work will generate enough savings to pay for the project over the life of the contract. Contracts can last up to 25 years, and after they end, all additional savings go to the agency.
Further budget cuts probably will result in greater use of these contracts, said Keith Derrington, executive vice president and general manager of federal solutions for Ameresco Inc., a renewable energy corporation based in Framingham, Massachusetts. “It becomes one of the key avenues that they have to get that support type of work done and their facilities improved without additional appropriation,” he said in an Aug. 18 phone interview.
Of the 16 companies awarded energy-savings performance contracts from the Department of Energy, Honeywell International Inc. of Morristown, New Jersey, and Ameresco are the top winners, according to data supplied by the agency. Ameresco, awarded $1.47 billion between 1998 and May of this year, is working on Senate office buildings and the U.S. Capitol.
To contact the editor responsible for this story: Anne Laurent at Alaurent7@bloomberg.net